That doesn’t stop Honda Motor Co. from getting into EVs at all costs. It is the first Japanese automaker to publicly declare that it will cease sales of gasoline-powered cars entirely, set a target for 2040, and give newly minted Chief Executive Officer Toshihiro Mibe the once-in-a-lifetime chance to put his stamp on the company that his parentage is branded Can trace back 84 years.
“It’s a very bold goal,” said Yachiyo Tanaka, an analyst at automotive research firm Fourin. “Honda is committed to staying one step ahead of other automakers by adopting the latest technology.”
The loot, if Mibe can do it, is considerable. Prime Minister Yoshihide Suga has pledged to be carbon neutral by 2050 and companies with a first mover advantage could gain market share. The spread of electric vehicles in the country is 1%, which is well below China, the world’s largest market for electric cars, with around 6%.
Read more: It’s too early to focus solely on electric cars, says Toyota
But it is a bet that also extends beyond the borders of Japan. According to BloombergNEF, global sales of electric car electric vehicles will grow sharply, rising from 3.1 million in 2020 to 14 million in 2025. Honda, which generates about 56% of its sales from North America and about a quarter from Asia excluding Japan, has already begun partnering with high performing overseas automakers and signed a pact last year to expand General Motors Co. to use.
Honda’s electric strategy also includes its traditional strength – motorcycles. Honda plans to launch three new electric two-wheelers and ten new electric cars in China within five years by 2024 (the first mass-produced Honda e, launched last year, has a global sales target of 10,000 units per year).
Although motorcycles only make up around 14% of Honda’s total sales, their sales volume is much higher. Honda sells around 15 million two-wheelers a year versus around 4.5 million cars. Compare that to BNEF’s projections for electric two-wheeler sales of 78 million in 2040 from 27 million in 2020, and it’s not hard to see the appeal.
In March, Honda formed a consortium with Yamaha Motor Co., KTM AG and Italy’s Piaggio & C SpA to develop interchangeable battery standards for electric two-wheelers, three-wheelers and four-wheelers, as the global price drop for lithium-ion batteries continues to attract high-volume manufacturers Motorcycle market.
Honda “won’t hesitate” to form alliances if necessary, Mibe, who took the reins on April 1, said at its inaugural press conference earlier this month. He added that he thought the Japanese government’s goal was reasonable.
“We can’t put off our efforts and then expect to reach the last minute,” said Mibe, 59, although he noted that selling only zero-emission vehicles by 2040 will be “an arduous struggle.”
Honda declined to make Mibe available for an interview.
Critics of the Honda strategy wonder whether the goal is realistic. Bigger players like Ford Motor Co. don’t expect to be 100% carbon neutral by 2050, while Toyota gives hybrids a much more important role. It is a short-term tactic to attract the attention of stakeholders when the focus on environmental, social and corporate governance increases, said Takeshi Miyao, an analyst at Carnorama.
In order to position itself in the market, Honda has to say something different than Toyota, he said. “Honda had no choice but to unveil a plan that is almost opposite to investors. There’s no point in saying the same thing, “said Miyao.
Read more: Honda’s earnings outlook falls short of estimates after strong quarter
Honda’s decision to end its long history with gasoline engines is a definite change.
The commitment also comes after former CEO Takahiro Hachigo took a cost-cutting move amid falling profits at Honda’s auto division, factories closings, model cuts and the company’s elimination from the Formula 1 World Championship at the end of the 2021 season dismayed.
Honda was involved in Formula 1 more than half a century ago, competed as a participant, designer and engine supplier and won several championships in the world’s most watched motorsport competition.
“I never thought Honda would say goodbye to engines because that’s how Honda has done it so far,” tweeted one person. “I thought F1 was Honda’s DNA so it’s sad to hear of his withdrawal.”
The split was bittersweet for Honda engineers too. It can be more difficult to differentiate electric cars in the market, which is a problem for the entire auto industry, said one. Another, who also refused to be identified for not having the authority to speak publicly, said although the all-electric target may be challenging, Mibe has at least set a clear strategy and the general mood within the company is positive.
“It was a statement that only the CEO could make,” and inevitable given the world situation, said Tomiji Sugimoto, a former Honda engineer who now runs an automotive consultancy, said Sugimoto, who retired in 2016 after a 39-year career at Honda Mibe knew personally.
Mibe is not afraid of any challenge. As the automaker’s 34-year veteran, he has spent much of his time directing the company’s R&D efforts, focusing on striking the difficult balance between innovation and commercialization. In April 2020 he also became the managing director in charge of Monozukuri, a Japanese word that literally means “making things”.
Honda’s electric boost boils down to “how quickly we can make the EV business profitable,” he said when speaking to the press earlier this year.
This story was released from a news agency feed with no changes to the text.
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